Analysis of MoneyMaker Pvt Ltd's Board Role and Investor Program

This report analyzes the corporate governance practices of MoneyMaker Pvt Ltd, focusing on the role of its board of directors. It examines the board's responsibilities in determining strategy, developing organizational culture, and overseeing the composition of its committees. The report also investigates the effectiveness of non-executive directors and suggests improvements. Furthermore, it explores the reasons for and against developing an institutional investor engagement program, considering the company's compliance issues and the potential benefits of active shareholder involvement. The report also discusses required changes to the board performance assessment process. Overall, the report provides a comprehensive overview of MoneyMaker's governance structure and offers insights into enhancing its effectiveness and value to shareholders.

Brief to Board Chair

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
a) Role of board of MoneyMaker and its restructuring to better deliver value to shareholder1
b) Reasons for and against developing an institutional investor engagement program.........6
c) Required changes to the board performance assessment process at MoneyMaker............7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Corporate governance is an effective system consisting of rules, practices and process
through which a firm is being directed and controlled accordingly. It basically consists of
balancing the social and economic interest of MoneyMaker Pvt Ltd. The primary aim of this
project report is to appease the institutional investors by undertaking a review of company’s
governance compliance. This module consists of specific information about role of board in
determining the strategy and factors associated with them. Role of establishing the culture of an
organisation will also be discussed in this report. Apart from this, specific reason will be
provided for the development of an institutional investors engagement program. Along with this,
certain steps required to be taken into account for making changes are mentioned under this
report. Worthy corporate governance helps investor confidence which is vital for capability of
entities listed on ASX to compete for capital. (Corporate governance, 2013).
a) Role of board of MoneyMaker and its restructuring to better deliver value to shareholder
1): The role of the board in determining strategy and what factors can influence that role
As per the mentioned case, it is determined that board are being urged to play an active
role in any kind of strategic formulation. A well organised argument can be made in accordance
to board of MoneyMaker Pvt Ltd as it feels obliged to retain external experts to review corporate
strategies. There are various roles and responsibility that would be first undertaken at the time of
their appointment. The board of directors is appointed to act on behalf of MoneyMaker.
Corporate governance mechanisms such as board of directors that plays an eminent role in good
practices of implementing policies of stakeholder engagement that consists of effective process
to attain holistic transparency (Frias‐Aceituno, Rodriguez‐Ariza and Garcia‐Sanchez, 2013).
Role of board of director:
 Determine the company’s overall vision and mission to guide and set pace for their
current operations and future development.
 Create strategic options; select those to pursue and decide the means to implement and
support their shareholder.
Factors that have impact on the role:
 Board size: It has been seen that MoneyMaker has doubled the size after acquiring the
financial planning business. It makes huge impacts on the overall management of the
operations.
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 Proportion of outside directors: The role of board members gets affected in case the
composition of team gets expand. MoneyMaker board takes pride on their corporate
governance as well. Company suggest a dichotomous trade off focus underestimates
external director’s impacts on the overall growth of the company performance (Kim,
Mauldin and Patro, 2014).
Role of non-executive directors:
They have to follow certain role which are mentioned below:
 To have control on executive directors so that the presence of non-executive directors can
easily assist to ensure an individual persons or group to join the company.
 To contribute that non-executive directors would achieve overall leadership and
development of MoneyMaker.
Affecting Factor
 They need sufficient time to schedule their roles or duties in proper manner while it is not
seen in case of MoneyMaker.
 The cultural effect can also mediate their effectiveness in performing their role within an
organisation.
Role of chairman: There are certain roles in an organisation which acts as a facilitator and guide
for managing the board meeting. It consists of:
 Evaluating board composition and organisation.
 Clarifying board and overall management responsibilities.
 Planning and evaluating board and committee meetings.
Factors:
 After expansion of business, their role gets increase in respect to their shareholder to
provide value to them.
 Certain factors which are related with earlier compliance must be varied accordingly as
per the decisions made by MoneyMaker.
2): Role played by board in culture development in an organisation
As per the mentioned case, it has been seen that culture within the company is excellent
which is clearly being highlighted through the lack of complaints being presented to the board as
evidence. While going through case deeply, it has been determined that inappropriate culture is
being prevailed in MoneyMaker because after acquiring the financial business, company was not
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having any evidence about identities of people who are investing in their business. An internal
whistle-blower provided information to compliance committee that some of them were suspected
victim involve in laundering case through sales of MoneyMaker products (Cummings and
Worley, 2014).
Role of board in developing culture:
Culture impacts the interest of various stakeholder and henceforth derivatively has direct
and measurable impact on overall shareholder wealth. Culture as a governance role is neither
considered as optional nor tangential. “Australian Prudential Regulation Authority” said that bad
culture often leads to inappropriate outcomes for their investors and customer. The lack of a
compliance culture means that MoneyMaker and their directors being criminally liable under a
legal code of conduct. Although, it has been seen in recent times that causal effect of cultural
effectiveness on corporate governance has been clearly indicated under the given case situation.
In order to make appropriate comparisons among principal sectors those are related with cultural
aspects at the working environment and occupational exposure of employees are taken into
account (Cole, 2014).
Although, duties of a non-executive directors critically vary that involves in day to day
management. Non-executive directors cannot leave the issues of organisation culture which are
entirely based on administration of an organisation. It also fails to recognise that executive staffs
of leaderships group would be living the culture and be involved in it. Such kind of planning
would determine the organisation culture and bring about changes to that culture needed within
MoneyMaker Pvt Ltd. The principles and recommendation are structured around and seek to
promote certain principles such as:
Lay solid foundations for management and oversight: A listed entity could establish
and disclose the respective roles and responsibilities of the board and management.
Structure the board to add value: A listed entity would have a board of reliable size,
composition and skills as well as commitment to enable it to discharge their duties effectively.
Respect the right of security holders: The company should obey the rights of their
security holders through providing them with effective data and facilities to allow them to
exercise those right positively (Structure of the Principles and Recommendations, 2013).
3): Composition of board and their committees
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MoneyMaker Pvt Ltd is an organisation which has acquired an ongoing business due to
which there are several changes in the composition of company which are presented below:
Directors 8
Non-executive directors & Chief executive 3
Accountants 5
Management consultant 2
Lawyer 1
Due to changes in composition of organisation; has improved corporate governance of
business operations as now they are benefited with an additional board member who is a lawyer
and with which they can timely complete their all regulations and compilations as well. The
major factor of improving corporate governance is diversity and by composition changing
process, this business is bringing diversity in their personnel as well as their operations. Risk
management is a process of forecasting and evaluating financial risk which can be effectively
improved by MoneyMaker by minimising the risk of future contingencies. Five accountants also
can assist in risk management related to finance of the enterprise. Specifically, they asked
whether there is evidences of tangible benefits in pursuing a strategy of MoneyMaker company
to overcome all the issues they are facing with the corporate governance (Mahadeo, Soobaroyen
and Hanuman, 2012).
Compliance culture are the set of specific rules and regulations which are mandatory for
the organisation to be followed. For example, in this company training is given to new
employees for a month but after changing composition of board of organisation, it is suggested
that this culture should be changed and training period must be exceeded to 3 months.
Recognise and manage risk: Effective risk management practices cannot only assist in
protecting and establishing value, they can help in examining and capitalising on vital
opportunity. To enable the board to do this, the entity must have a reliable framework to identify,
measure and manage risk on an ongoing basis. There is certain recommendation:
 It has at least three members a majority of whom are independent directors.
 It is chaired through an independent director
 It consists within the responsibilities of the audit committee the responsibilities are
normally undertaken by a risk committee (Recognise and manage risk, 2013).
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4): Effectiveness of the non-executive directors and steps can be taken to improve
effectiveness
Non executive’s directors retain some specific rights and share subject to tale decisions
and making policies. Effectiveness of non-executives are evaluated in contingent situations and
the challenges. There is a significant role played by non-executives in an organisation. Key role
of Non-executive directors remain associated with progressive strengthening of business; subject
to organisational goals and objectives. A particular code is set out for best and effective practice.
All the actions and steps are taken on the basis of applied aspects and formations used in this
context. The main objective of code of ethics is to monitor the decisions which are taken by non-
executive directors. There are following steps which are required to be taken by board committee
and organisation subject to emphasise the effectiveness of non-executive directors which are as
follows;
 Initially, it is required to review the performance of board and of the executives. It should
be aligned in a single format to define the context of better understanding and
management of organisation mainly responsible for actions and the dimensions used for
effective corporate governance structure.
 The main concerns are addressed through proper response and consent which are more
stable and consequent manner. Chairman and chief executives are required to analyse the
financial aspect and corporate governance rules for better understanding the corporate
governance structure of organisation.
 Corporate strategy analysis equips manager and employees of management with the
concepts and techniques required to make effective decision within an organisation. In
increased emphasis on inter-industry connection that consists of business growth
planning (Grant, 2016).
 Second step is taken to find out the potential factors and the conflict of interest that arise
while making decision making plans and strategies. There is a proper recognition of
corporate governance and specified interest are taken in management with wider context.
These are called as assisting factors in effective management planning and independent
working in particular structure.
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b) Reasons for and against developing an institutional investor engagement program
MonetMaker Pvt Ltd is an ASX 200 company and there is an issue related to compliance
are considered in this context regarding operating and managing the operations for better
management and control. As per above case study, it is observed that there were various lacking
points found in terms of involvement of compliance committee in strategic planning and
developing strategies. Institutional investor plays vital role in terms of active shareholders. It is
one of the major argument subject i.e. whether institutional investor should be active as
shareholders to supervise management to be achieved and analysed. It will be effective decision
making for the investors to analyse all the statements before making any kind of planning (ASX
Corporate Governance Council, 2017).
An institutional investor is considered as a bank, finance companies, authorities,
insurance companies, labour union funds and union trusts, pension funds authorities and bodies.
These are the authorities that invest the funds and reserves in organisations to get appropriate
returns and considerable. It is required of involvement of institutional investors in the corporate
governance affairs of MoneyMaker Pvt Ltd by considering the reliable factors that relates to
corporate governance. Institutional investors help to assist in promoting good corporate
governance. It is important to attain customer interest and achievements of business for better
succession and formation of work. A good corporate governance depends upon transparent and
clear relationships with stakeholders, equity holders and the institutional investors. In the above
case scenario, it is found that there was lack of involvement of institutional investors in corporate
governance and developing strategies because board of directors of and format compliance
committee members were not involved in developing strategies. These barriers must be taken
into account for the institutional role in impacts which will be investing to grow beyond the
current limited activity of MoneyMaker (Wood, Thornley and Grace, 2013).
Lacking of proper involvement leads organisation towards breach of policies in terms of
stakeholders. The diverse forces regarding the stakeholder perspective and analysing the
performance of business are considered in corporate planning and strategies. At initial stage,
board committee of members did not put required interest and attentions towards due caring of
compliance strategies and developing strategies. Subject to considering the development
strategies, compliance managers was required to involve the institutional investors to form a
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compliance structure. As per new corporate governance rule, institutional investors also retain
the same voting rights and equal participation in board meeting.
At present, it is important to consider all the related aspects and the changes related to
stakeholders' interest, connect and involvement of institutional investor with in organisation. The
major lacking was related to distributing the plans and managing the business. Regulatory
measures are also required to considered while implementing the plans and making the strategies
for better development and corporate plans. It is required to retain certain number of shares by
institutional investor and membership rights. After pursuing the following points and
requirements institutional investors may involve in developing strategies plans and corporate
governance strategies.
As per above case scenario, the institutional investors of MoneyMaker Pvt Ltd need to
involve themselves in the corporate governance affairs because these are the main stakeholder of
organisation provides required funding and sources for effective execution. Shareholders
including the institutional investors are allowed to consult and put their points in respect of
making corporate governance management strategy. The board members are allowed to make
strategies and plans for effective working and management for more developing the compliance
plans (McCahery and et. al., 2016).
Disclosing the fact that recommendation is followed:
The council encourages listed entities not to take pedantic or legalistic method to their
corporate governance disclosures. Under the principles and recommendation, but rather to
provide a holistic and informative explanation of their corporate governance framework. Listed
entities would view their corporate governance statement not as a compliance document, but
rather as an opportunity to demonstrate that their board and management are alive to the
importance of having effective corporate governance (Darmadi, 2013).
c) Required changes to the board performance assessment process at MoneyMaker
Evaluation of board performance is the main objective of organisation. As per above case
scenario, it is analysing that board of directors of MoneyMakers needs to analyse the effective
path and measurement tool to examine the board performance. There is type of lacking found in
the compliance structure of MoneyMaker Pvt Ltd. There was no specific procedure and steps
followed regarding the changes and the modification in corporate governance. It is required to
rotate the role and responsibilities of board of directors within organisation that was missing in
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MoneyMaker Pvt Ltd. The accountants were the same for 20 years, provide advice regarding the
compliance. Educational assessments are credentialing examine all the issues those are affecting
the growth of the company. The domain of content and skills for managing the financial aspects
are taken into account (Hambleton, 2013).
After a long time, a non-executive director, Ava joins the audit committee and the
strategy committee. There is a breach which was caught by the chief investment officer of 10000
clients who did not have their identity and verification records in the database of MoneyMaker
Pvt Ltd. All clients are suspected subject to money laundering activities through money maker
products. It is observed that there was a lack of proper auditing and revaluation program made by
organisation for long time and breach to the board was founded in this particular case. After
overviewing the particular case management analyse the requirement of changes the board
performance assessment process at MoneyMaker. It is overviewed that the key aspects were set
up by some specific changes (Steps to be taken to effective board assessment process, 2018).
There are seven major steps that are taken to improve the performance assessment of business.
Step 1: What are the objectives
At initial stage, it is required to establish that what are the key objectives and principle
goals through which decisions be able to evaluate properly.
Step 2: Who will be evaluated
Performance will be evaluated by comprehensive evaluation containing different groups
as the board as board as all members, Key governance personnel.
Step 3: What will be evaluated
Potential problems, root causes and specific governance solutions where possible and
necessary aspects are considered are evaluated in specific format.
Step 4: Who will be asked
Specific questions as identified in the previous steps and the knowledge are asked
frequently subject to information. Level of broad experience bifurcated for the evaluation
process.
Step 5: What techniques will be used
Degree of formalities and the objectives are evaluated with the help of available
resources and the boards that are chosen.
Step 6: Who will do the evaluation
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The evaluation is made in terms of making impartially with others and appropriate
delegate to non-executive or leader.
Step 7: What do you do with the results
There is a particular participation is required to analyse the performance of board.
Main cause of changes is to improve the evaluation structure of board committee and
make corporate governance more viable. Hence, this is fundamental for organisation in regard of
achieving the determined task and manage work accordingly.
CONCLUSION
Compliance and corporate governance are the main aspect in terms of managing the
operations and business for specific development and operations. The above report summarises
the case scenario of lack involvement of compliance committee in developing strategies.
Regarding the issues, compliance structure of MoneyMaker Pvt Ltd Reframed. Role of the board
in determining strategy and factors that affect the role are considered and role are played by the
board and management in building the culture of organisation. Involvement of institutional
investor taken to make compliance and corporate governance structure is more viable. Required
changes are suggested and steps are taken regarding the changes made.
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REFERENCES
Book and Journals:
Cole, P., 2014. Developing the radiation protection safety culture in the UK. Journal of
Radiological Protection. 34(2). p.469.
Cummings, T. G. and Worley, C. G., 2014. Organization development and change. Cengage
learning.
Darmadi, S., 2013. Corporate governance disclosure in the annual report: An exploratory study
on Indonesian Islamic banks. Humanomics. 29(1). pp.4-23.
Frias‐Aceituno, J. V., Rodriguez‐Ariza, L. and Garcia‐Sanchez, I. M., 2013. The role of the
board in the dissemination of integrated corporate social reporting. Corporate social
responsibility and environmental management. 20(4). pp.219-233.
Grant, R. M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hambleton, R. K., 2013. Setting performance standards on educational assessments and criteria
for evaluating the process. In Setting performance standards (pp. 103-130). Routledge.
Kim, K., Mauldin, E. and Patro, S., 2014. Outside directors and board advising and monitoring
performance. Journal of Accounting and Economics. 57(2). pp.110-131.
Mahadeo, J. D., Soobaroyen, T. and Hanuman, V. O., 2012. Board composition and financial
performance: Uncovering the effects of diversity in an emerging economy. Journal of
Business Ethics. 105(3). pp.375-388.
McCahery and et. al., 2016.Starks. "Behind the scenes: The corporate governance preferences of
institutional investors." The Journal of Finance 71, no. 6 (2016): 2905-2932.
Wood, D., Thornley, B. and Grace, K., 2013. Institutional impact investing: practice and policy.
Journal of Sustainable Finance & Investment. 3(2). pp.75-94.
Online
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<https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-
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